KENYA: Sugar prices likely to remain high

Published: 07/17/2017, 12:49:36 PM

Consumers are set to continue shouldering the high prices of sugar after the sector regulator dashed hopes for a quick return to normal supply levels, according to Kenya's Business Daily.

The Agriculture and Food Authority (AFA) said it will take about five years for sugar production to stabilise.

AFA interim director-general Alfred Busolo said the duty-free imports from Common Market for Eastern and Southern Africa (Comesa) are also expected to stretch beyond the normal level of 200,000 metric tonnes.

The State on May 12 allowed importation of duty-free sugar to cushion consumers from high prices, which had hit KES200 (US$1.92) a kilo.

Busolo expects the quantity of untaxed sugar shipped into the country to range between 250,000 and 300,000 metric tonnes this year.

The tax waiver was expected to bring down the cost of sugar to a maximum of KES120 a kilo, but this is yet to be realised as most retail outlets still sell it at KES200.

"We have seen pockets of some traders overcharging because we keep carrying out surveys," Busolo said on Friday.

"The sugar is available, let them just avail the sugar."

The cost for a bag of local sugar, he said, remains KES4,800 at the factory.

Major factories have, however, closed down due to inadequate supply of cane, partly blamed on low rainfall since the last quarter of 2016.

The latest is Nzoia Sugar which shut down early June, while Mumias closed in April.

"We need to go back to the farmers - address the challenges of credit, seed cane and delay by millers in paying them," he said.

"Once the farmers are motivated and we target to use even 70% of the capacity (of factories), Kenya will not even be importing sugar."

The country was last October handed another two-year safeguard window on duty-free sugar imports from the Comesa bloc on promise that it would implement reforms in the ailing industry, including privatisation of the largely inefficient sugar millers.

"We are really working hard to implement the commitments that Kenya gave (Comesa). We do not want to sit back and always wait and keep requesting for those safety guards," Busolo said.